How does a loss occurrence policy differ from an aggregate policy?

A loss occurrence policy is designed to cover claims that arise from incidents occurring during the specific policy period, regardless of when the claim is reported. This means that as long as the event causing the loss takes place within the timeframe covered by the policy, it will be eligible for coverage. This is particularly important because it provides protection for incidents that might not be reported until after the policy period has ended, as long as the incident itself occurred while the policy was active.

On the other hand, an aggregate policy usually refers to a limitation on the total amount of coverage available over a specified period, often the policy year. While it might also cover incidents within the policy period, it is structured to limit the insurer's total liability—essentially capping the payouts that can be made for all claims combined during that time.

Understanding this distinction clarifies why choice B correctly identifies the fundamental difference between a loss occurrence policy and an aggregate policy. The focus is on the timing of the incidents' occurrence and the nature of the coverage limits, distinguishing how claims are managed and what protection is afforded to policyholders.